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F.No.3/24/2017-DIPAM-II B (Part-II) GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF INVESTMENT & PUBLIC ASSET MANAGEMENT Dated 14.9.2017 Engagement of Advisor(s) for Strategic Disinvestment in Air India Ltd. and its subsidiaries/joint venture- Request for Proposal 1.INTRODUCTION Air India (AI) and its subsidiaries are Central Public Sector Enterprises (CPSEs) under the administrative control of the Ministry of Civil Aviation. AI is a wholly owned Government of India Company engaged in the activity of Air Transport Operations and allied activities operating both domestically and internationally. In the year 2007, the Government of India established National Aviation Company India Limited (NACIL) to facilitate the merger of two state owned airlines in India, viz. Air India and Indian Airlines. After completion of the legal merger in August 2007 (appointed date of merger-April 01,2007),NACIL was renamed as Air India Limited in November,2010. The airline has five subsidiaries and a joint venture (JV) company as under: • Air India Express Limited (AIEL) – the low cost subsidiary which operates to various stations in the Gulf, Middle East, South East Asia from various points in India but predominantly from the Kerala. • Air India Air Transport Service Limited (AIATSL) - the Ground handling subsidiary of Air India which was hived off from the main airline and operationalized in 2014. • Air India Engineering Services Limited (AIESL) - the MRO subsidiary of Air India which is primarily involved in the maintenance, repair and overhaul of engines and airframe. This was also operationalized in Jan 2015 under a Cabinet approval. 1 • Airline Allied Service Ltd (AASL) – Provides Regional connectivity and operates to NE region and to Tier II and Tier III cities sometimes under a Viability Gap Funding program. • Hotel Corporation of India (HCI) - which has two Hotels viz., in Delhi and Srinagar and Chefair Flight kitchen units in Mumbai and Delhi. • JV with AI/Singapore Air Transport Services (SATS) for ground handling activities at Delhi, Mumbai, Bengaluru, Trivandrum and Mangalore. Equity is held in the ratio of 50:50. Air India, its subsidiaries, Joint venture, Special Purpose Vehicle (SPV) or any other entity created during the process of strategic disinvestment, hereinafter referred to as “ AI group”. AI group operates to 42 international destinations and over 70 domestic stations. It has an operating fleet of 142 aircraft comprising65 A-320 aircraft, 15 B777 aircraft, 24 787 aircraft, 23 737-800 and 11 ATRs and 4 B747 aircraft. The Headquarters of AI is located at 113, Gurudwara Rakabganj Road, Parliament Street, New Delhi and a Corporate Office in Air India Building, Nariman Point, Mumbai. The subsidiaries, viz. AIESL and AIATSL also have their Headquarters in the same building at New Delhi. AASL has its Headquarters in Alliance Bhawan, New Delhi near the Airport and HCI has its headquarters at Centaur Hotel, New Delhi. AIEL has its headquarters in Cochin. AI is 100% owned by the Government of India. Its share capital as on 31st March,2017 is Rs.24,425 crore and its authorized capital is Rs.30,000 crore. Except for Hotel Corporation of India, all the other subsidiaries are wholly owned subsidiaries of Air India. The shares of AI group are not listed and they are unlisted companies. 2. PROPOSAL The Government of India (GoI) has ‘in-principle’ decided to consider the disinvestment of the AI group as a whole or its constituents fully or part thereof through strategic disinvestment with transfer of management control. The GoI proposes to engage upto two Transaction Advisor(s) from reputed professional consulting firms/investment bankers, merchant bankers, financial institutions, banks, etc. for providing Advisory services and managing the strategic disinvestment process. The selected Transaction Advisor(s) will work as a team and be called “Advisor”. The responsibility and liability of successful discharge of the obligations will be jointly and severally applicable. 2 3. SCOPE OF WORK OF THE ADVISOR The Advisor will be required to undertake tasks related to all aspects of the strategic disinvestment process culminating into successful completion of the transaction and would, inter alia include but not limited to advising and assisting GOI on modalities of strategic disinvestment and the timing; recommend the need for intermediaries required for the process of strategic sale; help identification and selection of the same with proper Terms of Reference; preparation of all documents like Preliminary Information Memorandum (PIM), Confidential Information Memorandum (CIM), Request for Proposal (RFP), Confidentiality Agreement etc.; structuring the transaction; suggesting measures to fetch optimum sale value; positioning of the strategic sale, inviting and evaluating the bids, assisting and professionally guiding during the negotiations with prospective buyers, drawing up the sale/other agreements and advising on post sale matters on a continuous basis. The Terms of Reference would include: (i) Advising GoI on the modalities and methods and the timing of the strategic disinvestment of AI group and preparing and submitting a detailed operational scheme to successfully implement the strategic disinvestment process, indicating tentative timelines for each activity; (ii) Preparing the deal collateral for the transaction including but not limited to: (a) Preliminary Information Memorandum (“PIM”) with intent to providing prospective buyers information about AI group and its business to enable them to send in their Expression of Interest. (b) Confidential Information Memorandum (“CIM”) covering detailed information about AI group and its business; (iii) Advise and assist GoI in identifying and selecting specialized professional intermediaries required for the transaction to be appointed by GoI and their work to be coordinated by the Advisor; (iv) Facilitating execution of Non-Disclosure Agreements (“NDA”) and subsequent communication and providing the bidders with information on the asset and the transaction; (v) Assist in the process of strategic sale; (vi) Supporting AI group in setting up of the e-data and/or physical data room and assisting in the smooth conduct of the due diligence process; (vii) Positioning the disinvestment of GoI equity in AI group to generate interest among the prospective buyers/purchasers/investors; 3 (viii) Managing a transparent solicitation process from potential buyers/investors including: (a) Preparation and issuance of advertisement/RFP etc. and organizing preparatory meeting(s) and site visit(s); (b) Analysis of and framing/drafting replies to queries of prospective bidders/investors and making necessary modifications, if required in the bid documents; (c) Invitation and evaluation of bids from prospective purchasers/ investors and preparation of requisite documents leading to short listing of bidders for negotiations; (ix) Conducting road shows in India and abroad; (x) Assisting in negotiations with shortlisted bidders/investors; (xi) Assist GoI in fixing the range of the fair reserve price considering the valuation of AI group based on the methods including but not limited to discounted cash flow; relative valuation; replacement cost method and asset- based valuation and highlighting the pros and cons of various methods and also highlighting the fact that many variations of these three valuations exist. While assisting in fixing reserve price, the report of the Asset Valuer will also be considered. The GoI will have the option of getting the valuation done from any other agency; (xii) Preparation and execution of requisite agreements (share purchase agreement, shareholders’ agreement etc), and all legal documentation required for execution of the transaction on behalf of GoI, on mutually acceptable terms with the successful bidder; (xiii) Ensuring compliance of applicable regulatory requirements including obtaining statutory approvals and clearances, wherever necessary, and coordinating and monitoring the progress of the transaction until its completion. (xiv) Assist in closure of the transaction; (xv) Advising on post-sale matters, if any, for a period of up to 12 months. Documents relating to the transaction be digitised and catalogued and handed over to Ministry of Civil Aviation and DIPAM. Advisor will also assist the departments in analysing these records as and when required ; (xvi) Providing any other analytical and transactional support required by GoI for successful completion of the transaction. 4 The ToR mentioned above are indicative and non-restrictive in nature. There may be some services relevant but not expressly captured in the aforesaid Scope of Work, which upon being brought to the notice of the Advisor by GoI will also form an integral and mandatory part of the ToR. 4. ELIGIBILITY 4.1 Bidder should be a reputed professional consulting firm/ investment banker/ merchant banker/financial institution/bank having experience of at least 5 years for providing similar advisory services for disinvestment, strategic sale, M&A activities, private equity transaction etc. 4.2 Bidders should have advised, handled and successfully completed at least one transaction of merger/acquisition/takeover/strategic disinvestment/private equity transaction of the size of Rs. 4,000 crore or more between the period from 1.4.2012 to 30.6.2017. 4.3. The interested parties are required to furnish an Affidavit-cum-Undertaking in the format as in Annexure-1 regarding ‘no conviction’ and ‘no conflict of interest’.

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